Friday, January 6, 2012

Benefit Corporations catching on

"But why would public-spirited corporations embrace these exacting duties when they can simply roam free and do a little bit of altruistic good on the side? For one thing, Benefit Corporations can’t be held liable by courts for failing to place profits over everything else. This is an important shift in law. The fear of shareholder litigation has driven many public-spirited businesses, most famously Ben & Jerry’s, to take the high bid rather than the high road in a corporate takeover fight. Becoming a Benefit Corporation declares legal independence from the profits-über-alles model. More important, having Benefit Corporation status sends a powerful message to shareholders, employees, business partners and consumers about what kind of company you’re running. The signal generates instant branding, internal cohesion, consumer enthusiasm and links to a vibrant national B Corp network that brings in more than $4.5 billion in revenues."

corporations in the US are bound by law to do what is best for their shareholders. Disney can try to save the Polar Bears, but their had better be a branding advantage to doing it, or the shareholders can force the program to stop for fear that it would hurt their dividends. This is why it is said corporations have no soul. They can only serve to make money for those who own their stock. Period.

Benefit Corporations bypass this problem by saying up front to potential shareholders that they are NOT built simply to feed the greed of their shareholders. I like it.